DC’s Real Estate Market Is Weird Right Now

Real-estate conditions are usually described as being either a buyer’s market or a
seller’s market. But what’s going on right now in Washington, say insiders, is
downright odd, with some homes for sale lingering (as in a buyer’s market) and others
getting snapped up in a bidding war (common in a seller’s market), sometimes for no
discernible reason.

“Since about the third week of September 2023, the market is what the market is and
we’re just here for the ride,” says Brett West, an agent with McEnearney Associates.
“Houses that were expected to sell fast sometimes sit on the market for ten days or
two weeks, and sellers get worried. I tell them to take a breath and don’t rush to
reduce the price if it seems appropriate.”

One of West’s listings sat for 79 days this past summer, despite being priced less than
similar houses nearby, while a comparable listing sold in four days. A one-bedroom
condo in North Bethesda listed by Morgan Knull, an associate broker with RE/MAX
Gateway, had no interested buyers for weeks, then sold at full price to a cash buyer.

The usual drivers of sales are at play—location, price, and neighborhood—but high mortgage rates and limited inventory also are factors. “Everyone just needs to get used to changes in the market,” says Corey Burr, a senior vice president at TTR Sotheby’s International Realty.
Despite the apparent vagaries of residential real estate right now, buyers and sellers can follow some tricks to try to take advantage of the weirdness.

OPPORTUNITIES IN A SHIFTING MARKET
Several agents we spoke with said buyers’ concerns about crime and schools in the District have contributed to a weaker market in the city compared with the suburbs. “People feel a diminished sense of security in the city now, plus buyers with kids depend on the luck of the draw of the [school] lottery system,” West says. “Some DC sellers are moving to the suburbs for the schools.” He notes a flip side, too: “For buyers who want to live in DC, this is an opportunity. A lot of neighborhoods have great housing stock and more relaxed prices than in recent years.” For example, in midsummer, West sold an upgraded, detached five-bedroom house with four and a half bathrooms and a two-car garage for $1.45 million. The original asking price for that 16th Street Heights property was $1.975 million, and he’d expected it to sell for $2.1 million or more. Another property in the neighborhood sold for $1.1 million, but West had anticipated it would sell for more than $1.2 million. “Right now, a home that receives multiple offers in DC is an exception,” West says.“Buyers coming from highly competitive markets like Northern Virginia are likely to breathe a sigh of relief that they don’t have to throw out all their contingencies or escalate their offer.”

High-density neighborhoods that were starting to hit their stride prior to the pandemic, such as Trinidad and the H Street corridor, are undervalued now, West says: “A lot of the upward value we saw in these neighborhoods retreated as restaurants and retail backed out with the pandemic.”
The weakest part of the housing market is condos, particularly in the District.“Condos are often an entry point into the market for first-time buyers, who tend to be more mortgage-sensitive,” says Ericka S. Black, an agent with Coldwell Banker Realty.“Another issue is that DC ran out of funding for HPAP [the Home Purchase Assistance Program] and won’t have more until October. I had two buyers drop out of contracts because they couldn’t get that down-payment assistance.”

Even newly built condos are slow to sell, Black says. One in Brentwood, near the Rhode Island Avenue Metro station, took seven months to find a buyer, and another in Columbia Heights took nine. Some sellers give up and rent their condos to avoid losing money.
Excess supply of condos, though, helps buyers, says David Shotwell, an agent with Compass. “Once rates drop, there will be a lot more buyers competing again, so it pays to get in now and refinance later,” he explains. “Now buyers can negotiate the price, have a home inspection, and negotiate for the sellers to buy down the rate.”

For buyers with deeper pockets, there may be opportunities on the upper end. While luxury homes always take longer to sell than lower-priced options, the market is particularly slow in the $2-million-to-$3-million range, Knull says: “It’s hard to know why, but it could be concern about the upcoming election, about higher home prices,or just because buyers in that price range made their moves in 2020 to 2022.”